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Developing an Investment Policy
The investment policy is the cornerstone of constructing a well-diversified portfolio for clients. Its purpose is to link the investor’s unique goals and objectives with what is reasonable to expect from capital markets. The Investment Policy Statement is a working document and must describe explicitly the responsibilities of those involved in the investment process, the portfolio’s tolerance for risk, asset allocation strategies and targeted asset mix and the investment opportunity set available. The document must be developed by those responsible for assuming the consolidated portfolio’s investment risk; it is too important to be delegated.
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